G.M. Offers Deals to Cut Overstock

Tuesday

The announced production cuts and increased incentives, including no-interest loans, come as the automaker struggles amid a consumer exodus from pickups and sport utility vehicles.

DETROIT — General Motors, which has struggled to stop depending on big discounts to draw in customers, is pulling the sale banners out again.

G. M. said on Monday that it would offer long-term, no-interest loans on most models through June 30. That is the last day of a dismal second quarter in which gasoline prices soared to $4 a gallon and dealer showrooms emptied out.

In announcing the sales blitz, G. M. also said it would cut production of slow-selling pickups and S.U.V.’s by an additional 170,000 vehicles this year and increase by about 50,000 its output of fuel-efficient cars and crossovers, which are in short supply at many dealerships.

It was the second time this month that G. M. has announced plans to build fewer trucks and more small cars. The Ford Motor Company made a similar announcement a few days earlier.

G. M. also said it would raise prices on 2009 models by an average of 3.5 percent to compensate for lower sales volumes and higher material costs.

G. M.’s no-interest financing offers, which are good on loans of up to six years, begins Tuesday.

Inventories of trucks made by all of the automakers are piling up. G. M. had a 104-day supply of the half-ton Chevrolet Silverado in stock, and Nissan had a 132-day supply of its full-size pickup, the Titan, a record high, according to Edmunds.com

“We’re really just trying to spark the market.” said Mark LaNeve, G. M.’s vice president for North American sales and marketing.

But Mr. LaNeve, though optimistic about how consumers will respond to G. M.’s new offer, conceded that such sales might not work as well in today’s market as they had in the past, with fuel efficiency foremost in the minds of shoppers who used to focus on their monthly loan payment amount. Three years ago, the Detroit automakers generated huge demand by offering “employee pricing” discounts to everyone.

Ford this month started an “employee pricing” sale on its F-series pickup truck after the Honda Civic displaced the F-series line to become the country’s top-selling model in May. (The F-series, which had been the top seller on an annual basis for 26 consecutive years, was fifth last month.)

Yet the F-series sale has not done enough to thin bloated inventories of the trucks, prompting Ford to delay the introduction of its new F-150 truck by two months to give dealers more time to sell off the current version.

Analysts say G. M. has little choice but to try the sale strategy. J. D. Power & Associates estimates that overall industry sales through the first three weeks of June were equal to an annual rate of 12.5 million vehicles, making it the worst month in 15 years.

“I think it’s the smart thing to do right now,” said David Healy of Burnham Securities. “They have to clean out these inventories. I think it will help. The fact that they have raised the prices on the 2009 models is a motivation for consumers to take advantage of these zero-interest deals.”

G. M. is excluding some fast-selling models from its “72-hour sale” (most dealers are open for a total of about 72 hours during the seven days that the offers are available) including the Chevrolet Aveo, Cobalt and Malibu.

In past sales, those same models were among those that G. M. tried to clear out because they were slow sellers otherwise. But now their high fuel-economy ratings, along with a redesign for the Malibu, have made them far more desirable.

Mr. LaNeve said he hoped that the market would improve toward the end of the year, although he said he did not believe it could recover as much as he once thought. He acknowledged that he was wrong in thinking that a recovery would have begun by now.

“I do believe,” he said, “at least we hope — that Q2 was the bottom.”

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